"When it comes to fees, true skills should still be worth a lot," Asness said at the Buttonwood Gathering, a conference organized by the Economist magazine in New York. "If there's any problem with the hedge-fund industry it's not that there aren't strategies worth 2 and 20, it's that the whole industry is being priced as if it's skill."

Funds traditionally have charged 2 percent of assets per year in management fees plus a 20 percent slice of profits above their performance benchmarks. Some clients have negotiated lower fees for new funds after 2008's record losses for the $1.7 trillion industry.

"The problem with hedge funds being net long is not that net long is a bad idea, it's that they are charging 2 and 20" for investing in stocks, Asness said.

Asness, 44, said he considered taking AQR public before the financial crisis, and he isn't ruling out the possibility of an initial offering.

"I would never say never -- it's somewhere down the road in terms of succession and whatnot," he said. "I kind of publicly did consider it about an hour and a half before the bubble burst. So I can't act as if I would never do such a thing. Ten years from now -- I don't make any predictions."

Asness, who has a doctorate from the University of Chicago and is a Marvel comic book collector, left Goldman Sachs Group Inc. in 1998 to manage AQR, whose assets reached $26.8 billion at the end of August, according to investors.

AQR's flagship Absolute Return fund fell more than 50 percent from the start of 2007 through 2008. The fund rose 38 percent in 2009 and more than 10 percent through mid-September of this year, investors say.